ManagementPNB net flat due to treasury hit
Punjab National Bank (PNB) on Wednesday reported a marginal rise in its net profit for the third quarter of the current financial year at Rs 1,011 crore, up 0.54 per cent from Rs 1,005 crore in the corresponding period of 2008-09. Total income also remained flat at Rs 6,236.55 crore in the quarter. In the year ago period, it stood at Rs 6,236.16 crore led by treasury gains.
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PNB’s Chairman and Managing Director KR Kamath said the growth remained flat because of a fall in treasury income at Rs 157 crore from Rs 341 crore last year.
“In the third quarter this year, we did not have support from treasury in the same way as we had last year. Our profit has remained at almost the same level this time, despite a drop in treasury income,” Kamath told a press conference.
Total business of the bank crossed Rs 4,00,000 crore on December 31, 2009, to reach Rs 4,04,373 crore against Rs 3,38,728 crore in the December quarter last year, showing a growth of 19.4 per cent.
Deposits rose to Rs 233,946 crore from Rs 197,069 crore in the year ago period, up 18.7 per cent. Advances rose 20.3 per cent to Rs 170,427 crore and the credit-deposit ratio improved to 72.8 per cent. Net interest margin for the quarter stood at 3.84 per cent and net interest income grew by 22.8 per cent. The capital adequacy ratio as per the Basel-II norms was at 14.56 per cent and 13.97 per cent as per Basel-I.
Union Bank net plunges 20.4% on MTM losses
Union Bank of India today reported a 20.4 per cent decline in its net profit to Rs 534 crore for the quarter ended December compared with Rs 671 crore recorded in the same period of the previous year.
The bank had benefitted by a Rs 291-crore provisioning write-back made on its investment during the third quarter of 2008-09. However, as bond yields rose during October-December of 2009-10, the bank had to incur a mark-to-market loss of Rs 40 crore.
In addition, net interest income (NII) fell by 5.42 per cent to Rs 1,064 crore during the reporting period on lack of loan demand and successive cuts in prime lending rate by the bank. NII, however, rose sequentially by 23.15 per cent, and the bank’s management expects the trend to continue in the fourth quarter also, as loan growth is expected to pick up.
Its bottom line was helped by an increase in core fee income, which rose by 32 per cent to Rs 214 crore. This also helped non-interest income to rise 17.72 per cent to Rs 465 crore despite a subdued treasury operation.
Total deposits increased by 16.54 per cent on year to Rs 151,085 crore, while low-cost deposits grew at a healthy pace of 32.34 per cent. Low-cost deposits now constitute 32.34 per cent of the bank’s total deposit. Union Bank aims to grow its low-cost deposit share to 35 per cent by March 2012. Increase in the low-cost deposit and fall in cost of funds helped the bank increase its net interest margin sequentially to 2.71 per cent in the October-December period from 2.34 per cent in the previous quarter. Chairman MV Nair expects the fourth quarter NIM to be around 2.8 per cent, while for the full year, NIM is seen at 2.6 per cent. “In the long run, our aim is to have 3 per cent NIM,” Nair said.
Asset quality of the bank worsened during the reporting period with net non-performing asset rising to 0.58 per cent from 0.14 per cent recorded in the year-ago period. Gross NPAs were up from 1.68 per cent to 1.96 per cent. The bank sees gross NPA to increase to 2 per cent by March-end. Provision coverage ratio of the bank was at 80.04 per cent.